Novo Nordisk Lawsuit Escalates Legal and Regulatory Risks for Hims & Hers

What happened

Novo Nordisk has sued Hims & Hers over its compounded semaglutide obesity drug, alleging patent infringement and seeking damages and a sales halt, as reported in recent news. This lawsuit directly aligns with the litigation and regulatory risks highlighted in the DeepValue master report, where FDA enforcement and branded manufacturer pressure are key concerns. If successful, it could force HIMS to discontinue or alter its GLP-1 offerings, which contributed approximately $420 million in online revenue in the first half of 2025, threatening a core growth engine. HIMS's stock has already plummeted over 60% from its peak due to such catalysts, yet valuation remains elevated at a P/E of 27.6x, offering limited downside insulation. This legal escalation intensifies near-term operational uncertainty, making regulatory and legal outcomes the dominant swing factors for financial performance and investor sentiment.

Implication

Operationally, an injunction could disrupt HIMS's compounded semaglutide sales, impacting subscriber growth and average revenue per user, which are critical to its financial model. Financially, this risks revenue shortfalls and further gross margin compression, already down to 74% in Q3 2025 from 79% a year earlier, straining profitability. Regulatorily, it signals intensified FDA scrutiny, possibly accelerating API restrictions and marketing constraints that could choke supply and conversion rates. Valuation-wise, the high multiples (EV/EBITDA 55.0x) provide little protection if legal outcomes are adverse, increasing downside risk as market sentiment sours. Strategically, HIMS must expedite diversification into non-GLP-1 categories to reduce dependence on this contested segment, but execution remains uncertain amid rising fixed costs.

Thesis delta

The lawsuit validates and amplifies the bear case from the DeepValue report, increasing the probability of regulatory enforcement and product disruptions. It narrows the timeline for negative catalysts, requiring closer monitoring of court proceedings for potential injunctions that could trigger the outlined thesis breakers.